US-based SESAC Music Group (SMG) has accomplished a USD $889 million entire enterprise securitization (WBS), marking the corporate’s fourth journey to the asset-backed securities market.
The information arrives as music firms more and more flip to the bond market to fund development.
Nashville-headquartered SMG – house to the SESAC PRO, plus Harry Fox Company (HFA), AudioSalad, and different firms – issued the bonds via a sequence of recent five-year senior notes.
These notes are backed by “considerably all SESAC Music Group’s property and revenues,” based on SMG – together with subsidiaries in its Performing Rights and Music Companies divisions.
SESAC’s Performing Rights division represents songwriters resembling Ariana Grande, Kurt Cobain, Jack Harlow, Billie Joe Armstrong, and Axl Rose, and composers of music in TV reveals like Seinfeld, Gray’s Anatomy, Fits, and Trendy Household, and movies like Automobiles 3, Ant-Man and the Wasp, Frozen, and Napoleon Dynamite.
In the meantime, the corporate’s Music Companies arm gives copyright administration, licensing, and royalty assortment providers for rightsholders worldwide through subsidiaries resembling AudioSalad, Mint, Audiam, HFA, and Rumblefish.
The brand new WBS transaction brings Blackstone-owned SESAC’s complete excellent debt to about $1.1 billion.
The securitization obtained robust investor curiosity, with demand thrice oversubscribed. SESAC stated this mirrored “strong investor demand underpinning SESAC’s WBS technique.”
MBW understands that SESAC Music Group executed its first tranche of entire enterprise securitization in 2019, securing between $500 million and $600 million.
That was adopted by a second tranche for $335 million in 2022. Final yr, SESAC raised one other $180 million via securitization.
Reasonably than securing finance backed by property resembling music rights – like Harmony‘s latest $1.77 billion ABS – SESAC Music Group constructions its debt by securitizing its whole firm’s operation.
Comparisons to a mortgage-like construction on non-public property will not be unwarranted.
“As we proceed to increase each segments of our enterprise, making certain long-term entry to institutional capital, and persevering with to construct upon our robust monetary basis and established repute are essential.”
John Josephson, SESAC Music Group
SESAC partly employs the apply of entire enterprise securitization to assist bankroll its acquisitions.
For instance, the agency used earlier WBS proceeds to assist finance its acquisition of manufacturing music firm Audio Community in 2021.
SESAC Music Group Chairman and CEO, John Josephson, stated of SESAC’s newest WBS transaction: “As we proceed to increase each segments of our enterprise, making certain long-term entry to institutional capital, and persevering with to construct upon our robust monetary basis and established repute are essential.
“WBS transactions just like the one we simply closed will stay a significant a part of our development technique, permitting us to proceed to decrease our price of capital whereas increasing our international capabilities in assist of the unbiased songwriters, composers, publishers, labels, artists and CMOs we serve.”
The timing of SESAC’s newest WBS transaction displays a surge in music business securitizations.
As talked about, simply final week, Harmony closed a $1.765 billion bond providing backed by its 1.3 million music copyrights.
In the meantime, Blackstone-owned Recognition Music Group disclosed plans for a $372 million issuance of five-year bonds backed by its multi-billion-dollar music catalog that features rights from Crimson Sizzling Chili Peppers, Justin Bieber and Shakira.
SESAC says its newest WBS issuance “is the biggest 144a, rated entire enterprise securitization within the music sector thus far.”
Morningstar DBRS assigned the notes a BBB(sf) ranking. Guggenheim Securities, Barclays Capital, and ING Monetary Markets served as joint bookrunners, whereas Blackstone Securities acted as co-manager.
Virtu World Advisors supplied valuation providers, whereas Latham & Watkins supplied authorized counsel for SESAC and White & Case for the underwriters.Music Enterprise Worldwide
